Good day, and thank you for standing by. Welcome to the Q1 26 Financial and Operating Results for C3IS Conference Call. At this time, all participants are in a listen-only mode. I would now like to hand the conference over to your speaker today, Dr. Diamantis Andriotis. Please go ahead.
Good morning, everyone, and welcome to the C3IS First Quarter of 2026 Earnings Conference Call and Webcast. This is Dr. Diamantis Andriotis, CEO of the company. Joining me on the call today is our CFO, Nina Pyndiah. Before we commence our presentation, I would like to remind you that we will be discussing forward-looking statements which reflect current views with respect to future events and financial performance and are based on current expectations and assumptions which by nature are inherently uncertain and outside of the company's control. At this stage, we could all take a moment to read our disclaimer on slide 2 of this presentation. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in US dollars. We have today released our earnings results for 2026. So let's proceed to discuss these results and update you on the company's strategy and the market in general. Please turn to Slide 3, where we summarize and highlight the company's performance starting with our financial highlights. For 2026, we reported an adjusted net income of $5.5 million compared to $1 million in 2025, an increase of 358%. Our voyage revenues came in at $11.6 million compared to $8.7 million, an increase of 34%. Our vessels' net book value was $76 million in first quarter 2026 compared to a market value of $75.5 million. These values exclude the two newly acquired product tankers as by the end of Q1 2026 no deliveries had been made yet. We had a cash balance of $27 million in first quarter 2026 compared to $14.9 million at year end 2025, an increase of 82%. Our adjusted EBITDA was $6.9 million compared to $3 million for the same period of 2025, an increase of 130%. The TCE rate of our Aframax tanker for Q1 2026 increased by 106% from Q1 2025 to $77,500. The TCE rate of our fleet increased by 98.6% from first quarter 2025 to $32,000. The first of the two newly acquired product tankers was the Clean Fury, delivered to us in Q2 2026; the second one is expected in Q3 2026. Our fleet capacity has increased by 387% since inception. Slide 4 shows the handysize demand and the time charter average rates both of which have been heavily impacted by the Middle East conflict. As the war persists, the Strait of Hormuz enters yet another week of disruption. While a handful of vessels have managed to transit the strait, and several nations are actively seeking diplomatic resolution with Iran, the overall impact on the dry bulk market is growing. Ongoing geopolitical tensions are influencing trade flows, input costs, and ton-mile demand, shaping the outlook for the sector. We expect a seasonal boost in iron ore trade; however, the downside will be the rise in input costs resulting from the Middle East war. Coal prices remain elevated, a strong incentive for miners to export more. Plus, on the consumption side, coal maintains its competitive edge over gas for power generation. While we expect to see increased volumes for higher grade coal as this trend persists, it remains unclear how quickly producers can ramp up production to meet the demand. We have not seen vessels carrying grains pass to the Persian Gulf since February 28. This could become a serious issue for Iran if this does not change over the coming weeks. Imports from Russia across the Caspian Sea are increasing. However, this is unlikely to be enough. The US Department of Agriculture forecasts iron's grain consumption at 42 million tons this year, of which half will be imported, primarily seaborne. The livestock sector is reported to typically hold a few weeks of stocks, so over the coming weeks we could begin to see disruption in food supply within Iran. The primary immediate impact from the conflict on the dry bulk market has been surging bunker costs and tightening prompt bunkering; suppliers have been advising clients to secure at least 10 days in advance across multiple bunkering hubs. A range of factors has helped drive up the handysize time charter average, which has increased from $9,400 for the period January to April 2025 to $12,700 for the same period in 2026, an increase of 35%. Various rounds of US-China trade tensions prompted China to buy more grains from Brazil, and Russia's invasion of Ukraine saw significant Russia-Europe trade being replaced by long-haul Russian trade to Asia. More recently, the Houthi attacks in the Red Sea, leading ships to reroute the long way around the Cape of Good Hope, and the conflict in the Middle East with the closure of the Strait of Hormuz have had a direct impact on ton-mile growth rather than volume growth. Slide 5 shows the handysize fleet values and data. Newbuilding activity declined in first quarter 2026 compared to fourth quarter 2025. The total number of vessels ordered in the previous quarter amounted to 185 vessels compared to 110 vessels this quarter. This, in part, could be explained by the US trade representative's plan to impose heavy port fees on Chinese-built or Chinese-operated vessels, which caused global ship owners to pull back sharply on ordering new dry bulk ships from Chinese yards through much of the year. Moreover, uncertainty swirling around President Trump's tariffs and foreign policy also deterred owners from heading to the shipyards. After a strong backlash from the shipping industry, and retaliatory measures from China, by November 2025 the port fees were effectively suspended. Yet the temporary policy briefly but significantly disrupted vessel ordering decisions midyear while high nominal newbuilding prices also had an impact. Long lead times for delivery of vessels due to shipyards being at full capacity have also discouraged newbuilding activity. On the fleet size, 33% of the fleet is above 15 years of age. The average age of the C3IS handysize fleet is 15.13 years as at the end of first quarter 2026. The order book of the handysize category stands at 265 vessels until 2028. This represents an order book to fleet ratio of 8.8%. On slide 6, we present the Aframax LR2 spot rates and age. Aframax rates strengthened across the quarter. In the Atlantic, the US Gulf route continued to rise and push to higher levels, while the Mediterranean also firmed on steady activity in the short position list. The segment exhibited strong upward momentum across key routes. The highest average rate was in the North Sea Continent route at almost $120,000. The highest percentage increase in average rate was on the Carriage-USG route, surging by 209% to an average of almost $110,000 per day. The highest daily rate recorded was on the Carriage-USG route at $325,000 per day. With the market remaining tight in both basins, owners were supported throughout the period with the rate development reflecting tighter positioning and steady cargo flow. The Aframax LR2 global fleet stood at 1,220 vessels by 2026. Of these, 292 vessels are over 20 years, accounting for 24% of the total number of vessels. The highest number of vessels was in the 15–20 years category, accounting for 28% of the total. The age of our Aframax tanker as of 03/31/2026 was 15.7 years. The fleet increased by 23 vessels during first quarter 2026, reflecting a change of 2%. Deliveries totaled 24 vessels, representing 2% of the starting fleet, all of which were delivered in the first quarter. Demolition remained limited with 1 vessel scrapped, equivalent to 0.1% of the fleet. The current order book comprises 215 vessels, accounting for 17.6% of the existing fleet. Of these, 61 vessels, or 5% of the fleet, are scheduled for delivery later in 2026. Slide 7 shows the MR2 product tanker rate profile and fleet growth. Demolition activity is expected to remain strong in the MR2 category. More vessels were built in the early 2000s compared to the 1990s. Nine percent of the trading fleet is over 20, 27% is between 15 to 19 years old, 21% is between 10 and 14 years old, 18% is 5 to 9 years old, while 14% was less than 5 years. The order book to trading ratio is 15.7% in deadweight terms. Net MR2 fleet growth in 2025 was 4.7% year-on-year. The net fleet growth is expected to continue at around 6.5% in 2026 and then around 4.7% in 2027. The fleet growth forecast for 2026–2028 is based on the current order book after assuming slippage and expected demolition. Slide 8 shows the fleet of C3IS. As of 2026, C3IS owned and operated a fleet of 3 handysize dry bulk carriers and 1 Aframax tanker. As previously announced, the company has acquired 2 product tankers, one of which, the Clean Fury, was delivered in Q2 2026 and the second one is due in Q3 2026. With these additions, the fleet will increase its capacity to 311,000 deadweight, an increase of 387% from inception. All vessels have had their ballast water systems already installed. All the vessels are unencumbered and are currently employed on short- to medium-term period charters and spot voyages. None of the vessels were Chinese-built, hence not affected by the ongoing threat of tariffs and are of superior quality. Slide 9 shows a sample of the international charterers with whom the management company has developed strategic relationships and has experienced repeat business. Repeat business highlights the confidence our customers have in our operations and the satisfaction with the service we provide. The key to maintaining our relationships with these companies is high standards of safety and reliability of service. I will now turn over the call to Nina Pyndiah for our financial performance.
Thank you, Diamantis, and good morning to everyone. Please turn to Slide 10, and I will go through our financial performance for the first three months of 2026. We reported voyage revenues of $11.6 million for 2026 compared to $8.7 million in Q1 2025, an increase of 34%. Our net revenues were $10.4 million compared to $5.8 million in 2025, an increase of 78%. The time charter equivalent rates of our vessels were also positively impacted with an increase of 99% for the fleet and 106% for our Aframax tanker compared to Q1 2025. Voyage cost decreased by 67% from last year and was due to the decrease in bunker cost and port expenses. The bunker cost decrease was a result of more time and spot charters, where the charterer pays the fuel cost. Voyage expenses for the three months ended 03/31/2026 included bunker costs and port expenses of $500 thousand and $300 thousand respectively, corresponding to 42% and 25% of total voyage expenses, since the vessel Afrapearl operated in the spot market. Operating expenses for the three months ended March 31, 2026 mainly included crew expenses of $1.2 million, corresponding to 48% of total operating expenses; spares and consumable costs of $600 thousand corresponding to 24% of total vessel operating expenses; and maintenance expenses of $300 thousand representing works and repairs on the vessel corresponding to 12% of total vessel operating expenses. We reported $211 thousand as interest income, an increase of 41% from last year due to a higher balance of funds placed on time deposits. Loss from warrants for the three months ended March 31, 2026 was $2.3 million, whereas there was a gain on the warrants for the three months ended March 31, 2025 of $6.9 million. This change related to the net fair value losses on our warrants and were classified as liabilities. This is a noncash item and does not reflect our operational performance. Our adjusted EBITDA came in at $6.9 million for Q1 2026 compared to $2.9 million for Q1 2025, an increase of 130%. We reported a net income of $3.2 million and an adjusted net income of $5.5 million. The latter represents an increase of 358% from Q1 2025. We achieved a fleet operational utilization of 85% in Q1 2026. Turning to Slide 11 for the balance sheet. We had a cash balance of $27 million, an increase of 82% from year end 2025 in spite of the full payment of 90% of the purchase price of the Eco Spitfire of $15.1 million on 02/02/2025. Other current assets consisted mainly of receivables of $2 million and inventories of $900 thousand. The vessels' net value was $76 million for the four vessels less depreciation. Vessels' market values were $75.5 million. Trade accounts payable of $1.9 million were all balances due to suppliers and brokers; $1.2 million from this balance has currently been paid off. Payable to related party of $790 thousand represents the balance due to the management company, Brave Maritime. The warrant liability of $1.7 million relates to the net fair value difference on nonexercise warrants as of 03/31/2026. This is a noncash item. Our shareholders' equity is at a robust $102 million as of Q1 2026 compared to $95.1 million as of year-end 2025. Concluding the presentation on Slide 12, we outlined the key variables that will assist us to progress with the company's growth. Owning a high-quality fleet reduces operating cost, improves safety, and provides a competitive advantage in securing favorable charters. We maintain the quality of the vessels by carrying out regular inspections, both while in port and at sea, adopting a comprehensive maintenance program for each vessel. None of our vessels were built in Chinese shipyards; therefore, any potential US tariffs on Chinese-built ships are not expected to have any impact on our fleet. The company's strategy is to follow disciplined growth with in-depth technical and condition assessment reviews. Equity issuances will continue as management is continuously seeking timely and selective acquisition of quality non–Chinese-built vessels with current focus on short- to medium-term charters and spot voyages. Following this strategy, the company has added two product tankers to the fleet, one of which was delivered at the start of Q2 2026 and the second one expected in Q3 2026. We always charter to high-quality charterers such as commodity traders, industrial companies, and oil producers and refineries. Despite having increased our fleet by 387% since inception, the company has no bank debt. No interest was charged by the affiliated sellers on the purchase prices of the Afrapearl II, the Eco Spitfire, and the two recently acquired product tankers. Our upcoming CapEx obligations will be $39.7 million due on the two product tankers payable in January 2027. At this stage, our CEO, Dr. Diamantis Andriotis, will summarize the concluding remarks for the period examined.
For the first three months of 2026, we reported an adjusted net income of $5.5 million, an increase of 358% from 2025, and adjusted EBITDA of $6.9 million, an increase of 130%, and a cash balance of $27 million, an increase of 82% from year-end 2025 despite paying off the remaining balance of $15.1 million that was due on the Eco Spitfire in Q2 2025. At the start of Q2 2026, we took delivery of the first of the two product tankers recently acquired, with the second one expected in Q3 2026. We are fully delivered, thus significantly enhancing our financial flexibility. C3IS's financial landscape is seeing dynamic shifts following its current expansion efforts. This will be critical in building future competitive resilience as adding product tankers to the fleet enhances operational diversity, thus exposing the company to the growing tanker market, a sector ripe with potential. This will allow the company to capitalize on booming charter rates leading to a possible surge in revenues. We would like to thank you for joining us today and look forward to having you with us again at our next call for the results of 2026. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.